Witty riposte will only go some way to pacify drug group's doubters

Dull quarterly earnings statements with incremental numbers? Not for Sir Andrew Witty, chief executive of drugs giant GlaxoSmithKline. Wednesday's third-quarter results were larded with meaty promises of an initial public offer of its HIV vaccine business worth as much as £15bn, £1bn in cost savings and multiple management and structural changes. The Yorkshireman also pledged to at least maintain the dividend and said GSK would have an Ebola vaccine ready by the end of the year. Sir Andrew is clearly not waiting around for Sir Philip Hampton, GSK's new chairman, to make the big decisions when he arrives next year.

But Sir Andrew has a reformers' habit of standing on the front foot, and it has been a trying year for GSK which has included a £300m fine by Chinese authorities for bribing doctors. The biggest blow, though, has been the sharper than expected drop in sales of Advair, the 15 year-old blockbuster asthma drug that accounts for a fifth of the drugmaker's sales. Subsequent fears over the group's cash flow and GSK's dividend have fuelled Sir Andrew's critics.

Which is why Sir Andrew drew neon highlights around his plans to return billions to shareholders. He even hinted at spinning off the consumer healthcare business once the three-way swap with Novartis completes next year.

As a defence document, it goes some way to disarming GSK's gainsayers. What Sir Andrew still needs, though, is better news on the pipeline of drugs that might replace lost Advair sales. That will underpin the dividend and the shares in the medium term.

Sutherland's new fit

Taking the top job at SuperGroup, retailer of hoodies and arctic windcheaters, may not be a straightforward exercise in governance. But for Euan Sutherland it will be like donning trackie bums compared to his previous gaffe at the Co-Operative Group. He quit the mutual in March after a year as chief executive, declaring it "ungovernable".

Julian Dunkerton is snaffling the snappy title of SuperGroup Founder and Product and Brand Director. But he still owns 32 per cent and will stay on the board alongside co-founder James Houlder. Still, respect to Mr Dunkerton and SuperGroup for recognising the need to shift him from the daily slog of running a FTSE 250 group. The retailer is at the stage of expansion when Mr Dunkerton's "instinctive" entrepreneurship may cause fraying at the seams.

SuperGroup's relations with the City, where fashion choice is about what tie to wear to dinner, has not been easy after the profit warnings and schoolboy maths blunders that followed the retailer's debut in 2010.

Mr Sutherland's appointment should allow the group to put that behind it once and for all. That said, he should keep his trainers on. Having the former CEO and two founder-owners loitering in the boardroom isn't a recipe for putting one's feet up. Whether it is Rob Terry of Quindell, Lord Harris of Carpetright, or the Adderley family of Dunelm, too often founders hand over power only in name or snatch back control when they don't like their executives' style.

Cockeyed in the City

Monty Python of Life of Brian fame excelled in creating cockeyed optimistic-in-adversity characters. So does the Square Mile. A broker told Lombard a day or so ago that the IPO window may have closed, but more companies were talking about using cash to buy back shares, perhaps emulating the US. Buybacks are not exactly out of fashion - Glencore, BP and Centrica bought back shares on Wednesday alone. But the banker thinks lots more should follow.

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Investors may agree. Many say they are better able to deploy the cash piles built up by companies. Meanwhile boards would have you believe they have a clearer insight into their prospects than the market and they can see value in their own shares that isn't there in rivals.

Experience suggests, though, that executives often like what they see in the mirror too much, buying shares when they are expensive and seeing value when there is none. Next is an honourable exception, imposing a disciplined return target of 8 per cent on any investment including the retailer's own shares.

Executives' fascination with buybacks is understandable. They are tax efficient, buff up earnings per share and prompt gratifying bounces in share prices at least while buybacks are in progress. An awful lot of executive pay schemes are linked to EPS growth. And few bosses have been fired for handing cash back to investors. They are fired for poorly conceived M&A. But a policy of shrinking doesn't do much for revenue growth or returns on capital. And streams of companies taking on vast amounts of seemingly cheap debt to shell out cash to shareholders and executives would be a kind of madness.

kate.burgess@ft.com

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